Large number of buyers and sellers
Topic: Theory of the Firm, Supply and Perfect Competition · NCERT: Class 12, Ch 4 "The Theory of the Firm under Perfect Competition"
Meaning
This feature of perfect competition means there are so many buyers and sellers that each one is very small compared with the whole market. No single buyer or seller can change the market price by buying or selling more or less. Together with the other features, this makes every agent a price taker, someone who accepts the market price as given. NCERT notes that large numbers can exist only if entry and exit are free.
Example
In a mandi, thousands of small farmers sell paddy to many traders. If one farmer holds back half of their crop, the total supply hardly changes, so the price stays the same.
Don't confuse with
- Oligopoly: here a few large sellers dominate the market, and each one's decisions affect price and its rivals.